Subd. 2. Basic revenue. The basic revenue for each
district equals the formula allowance times the resident pupil
units for the school year. The formula allowance for fiscal
year 1998 is $3,581. The formula allowance for fiscal year 1999
is $3,530. The formula allowance for fiscal year 2000 is
$3,740. The formula allowance for fiscal year 2001 and
subsequent fiscal years is $3,875.

Subd. 3. Compensatory education revenue. The
compensatory education revenue for each building in the district
equals the formula allowance times the compensation revenue
pupil units computed according to section 126C.05, subdivision
3. Revenue shall be paid to the district and must be allocated
according to section 126C.15, subdivision 2.

(3) $190 times the limited English proficiency pupil units
according to section 126C.05, subdivision 17; plus

(4) $22.50 times the number of adjusted marginal cost pupil
units in kindergarten to grade 8.

Subd. 5. Training and experience revenue. The
training and experience revenue for each district equals the
greater of zero or the result of the following computation:

(1) subtract .8 from the training and experience index;

(2) multiply the result in clause (1) by the product of
$660 times the adjusted marginal cost pupil units for the school
year.

Subd. 6. Definitions. The definitions in this
subdivision apply only to subdivisions 7 and 8.

(a) "High school" means a secondary school that has pupils
enrolled in at least the 10th, 11th, and 12th grades. If there
is no secondary school in the district that has pupils enrolled
in at least the 10th, 11th, and 12th grades, and the school is
at least 19 miles from the next nearest school, the commissioner
must designate one school in the district as a high school for
the purposes of this section.

(b) "Secondary average daily membership" means, for a
district that has only one high school, the average daily
membership of pupils served in grades 7 through 12. For a
district that has more than one high school, "secondary average
daily membership" for each high school means the product of the
average daily membership of pupils served in grades 7 through 12
in the high school, times the ratio of six to the number of
grades in the high school.

(c) "Attendance area" means the total surface area of the
district, in square miles, divided by the number of high schools
in the district. For a district that does not operate a high
school and is less than 19 miles from the nearest operating high
school, the attendance area equals zero.

(d) "Isolation index" for a high school means the square
root of 55 percent of the attendance area plus the distance in
miles, according to the usually traveled routes, between the
high school and the nearest high school. For a district in
which there is located land defined in section 84A.01, 84A.20,
or 84A.31, the distance in miles is the sum of:

(1) the square root of one-half of the attendance area; and

(2) the distance from the border of the district to the
nearest high school.

(e) "Qualifying high school" means a high school that has
an isolation index greater than 23 and that has secondary
average daily membership of less than 400.

(f) "Qualifying elementary school" means an elementary
school that is located 19 miles or more from the nearest
elementary school or from the nearest elementary school within
the district and, in either case, has an elementary average
daily membership of an average of 20 or fewer per grade.

(g) "Elementary average daily membership" means, for a
district that has only one elementary school, the average daily
membership of pupils served in kindergarten through grade 6.
For a district that has more than one elementary school,
"average daily membership" for each school means the average
daily membership of pupils served in kindergarten through grade
6 multiplied by the ratio of seven to the number of grades in
the elementary school.

Subd. 7. Secondary sparsity revenue. (a) A
district's secondary sparsity revenue for a school year equals
the sum of the results of the following calculation for each
qualifying high school in the district:

(1) the formula allowance for the school year, multiplied
by

(2) the secondary average daily membership of pupils served
in the high school, multiplied by

(3) the quotient obtained by dividing 400 minus the
secondary average daily membership by 400 plus the secondary
daily membership, multiplied by

(4) the lesser of 1.5 or the quotient obtained by dividing
the isolation index minus 23 by ten.

(b) A newly formed district that is the result of districts
combining under the cooperation and combination program or
consolidating under section 123A.48 must receive secondary
sparsity revenue equal to the greater of: (1) the amount
calculated under paragraph (a) for the combined district; or (2)
the sum of the amounts of secondary sparsity revenue the former
districts had in the year prior to consolidation, increased for
any subsequent changes in the secondary sparsity formula.

Subd. 8. Elementary sparsity revenue. A district's
elementary sparsity revenue equals the sum of the following
amounts for each qualifying elementary school in the district:

(1) the formula allowance for the year, multiplied by

(2) the elementary average daily membership of pupils
served in the school, multiplied by

(3) the quotient obtained by dividing 140 minus the
elementary average daily membership by 140 plus the average
daily membership.

Subd. 9. Supplemental revenue. (a) A district's
supplemental revenue allowance for fiscal year 1994 and later
fiscal years equals the district's supplemental revenue for
fiscal year 1993 divided by the district's 1992-1993 resident
pupil units.

(b) A district's supplemental revenue allowance is reduced
for fiscal year 1995 and later according to subdivision 12.

(c) A district's supplemental revenue equals the
supplemental revenue allowance, if any, times its adjusted
marginal cost pupil units for that year.

(d) A district may cancel its supplemental revenue by
notifying the commissioner of education prior to June 30, 1994.
A district that is reorganizing under section 122A.35, 123A.46,
or 123A.48 may cancel its supplemental revenue by notifying the
commissioner of children, families, and learning before July 1
of the year of the reorganization. If a district cancels its
supplemental revenue according to this paragraph, its
supplemental revenue allowance for fiscal year 1993 for purposes
of subdivision 12 and section 124A.03, subdivision 3b, equals
zero.

Subd. 10. Supplemental levy. To obtain supplemental
revenue, a district may levy an amount not more than the product
of its supplemental revenue for the school year times the lesser
of one or the ratio of its adjusted net tax capacity per
adjusted marginal cost pupil unit to $8,404.

Subd. 11. Supplemental aid. A district's
supplemental aid equals its supplemental revenue minus its
supplemental levy times the ratio of the actual amount levied to
the permitted levy.

(i) the sum of the district's training and experience
revenue and compensatory revenue per actual pupil unit for
fiscal year 1996, and

(ii) the sum of district's training and experience revenue
and compensatory revenue per actual pupil unit for fiscal year
1994; and

(2) $100.

A district's supplemental revenue allowance may not be less
than zero.

(b) If a district's ratio of 1992 adjusted net tax capacity
divided by 1994-1995 actual pupil units to $9,025 is less than
or equal to .25, then the difference under paragraph (a), clause
(2), is equal to $0 for purposes of computing the district's
supplemental revenue under subdivision 9.

Subd. 13. Total operating capital revenue. (a) For
fiscal year 2000 and thereafter, total operating capital revenue
for a district equals the amount determined under paragraph (b)
or (c), plus $68 times the adjusted marginal cost pupil units
for the school year. The revenue must be placed in a reserved
account in the general fund and may only be used according to
subdivision 14.

(b) For fiscal years 2000 and later, capital revenue for a
district equals $100 times the district's maintenance cost index
times its adjusted marginal cost pupil units for the school year.

(c) For fiscal years 2000 and later, the revenue for a
district that operates a program under section 124D.128, is
increased by an amount equal to $30 times the number of marginal
cost pupil units served at the site where the program is
implemented.

Subd. 14. Uses of total operating capital revenue.
Total operating capital revenue may be used only for the
following purposes:

(1) to acquire land for school purposes;

(2) to acquire or construct buildings for school purposes;

(3) to rent or lease buildings, including the costs of
building repair or improvement that are part of a lease
agreement;

(4) to improve and repair school sites and buildings, and
equip or reequip school buildings with permanent attached
fixtures;

(5) for a surplus school building that is used
substantially for a public nonschool purpose;

(6) to eliminate barriers or increase access to school
buildings by individuals with a disability;

(7) to bring school buildings into compliance with the
Uniform Fire Code adopted according to chapter 299F;

(8) to remove asbestos from school buildings, encapsulate
asbestos, or make asbestos-related repairs;

(9) to clean up and dispose of polychlorinated biphenyls
found in school buildings;

(10) to clean up, remove, dispose of, and make repairs
related to storing heating fuel or transportation fuels such as
alcohol, gasoline, fuel oil, and special fuel, as defined in
section 296A.01;

(11) for energy audits for school buildings and to modify
buildings if the audit indicates the cost of the modification
can be recovered within ten years;

(12) to improve buildings that are leased according to
section 123B.51, subdivision 4;

(13) to pay special assessments levied against school
property but not to pay assessments for service charges;

(14) to pay principal and interest on state loans for
energy conservation according to section 216C.37 or loans made
under the Northeast Minnesota Economic Protection Trust Fund Act
according to sections 298.292 to 298.298;

(15) to purchase or lease interactive telecommunications
equipment;

(16) by board resolution, to transfer money into the debt
redemption fund to: (i) pay the amounts needed to meet, when
due, principal and interest payments on certain obligations
issued according to chapter 475; or (ii) pay principal and
interest on debt service loans or capital loans according to
section 126C.70;

(17) to pay operating capital-related assessments of any
entity formed under a cooperative agreement between two or more
districts;

(1) the total weighted square footage for all eligible
district-owned facilities; and

(2) the total unweighted square footage of these facilities.

(b) The department shall determine a district's maintenance
cost index annually. Eligible district-owned facilities must
include only instructional or administrative square footage
owned by the district. The commissioner may adjust the age of a
building or addition for major renovation projects.

(c) The square footage weighting factor for each original
building or addition equals the lesser of:

(1) one plus the ratio of the age in years to 100; or

(2) 1.5.

(d) The weighted square footage for each original building
or addition equals the product of the unweighted square footage
times the square footage weighting factor.

Subd. 17. Transportation sparsity definitions. The
definitions in this subdivision apply to subdivisions 18 and 19.

(a) "Sparsity index" for a district means the greater of .2
or the ratio of the square mile area of the district to the
resident pupil units of the district.

(b) "Density index" for a district means the ratio of the
square mile area of the district to the resident pupil units of
the district. However, the density index for a district cannot
be greater than .2 or less than .005.

(c) "Fiscal year 1996 base allowance" for a district means
the result of the following computation:

(1) sum the following amounts:

(i) the fiscal year 1996 regular transportation revenue for
the district according to Minnesota Statutes 1996, section
124.225, subdivision 7d, paragraph (a), excluding the revenue
attributable nonpublic school pupils and to pupils with
disabilities receiving special transportation services; plus

(ii) the fiscal year 1996 nonregular transportation revenue
for the district according to Minnesota Statutes 1996, section
124.225, subdivision 7d, paragraph (b), excluding the revenue
for desegregation transportation according to Minnesota Statutes
1996, section 124.225, subdivision 1, paragraph (c), clause (4),
and the revenue attributable to nonpublic school pupils and to
pupils with disabilities receiving special transportation
services or board and lodging; plus

(iii) the fiscal year 1996 excess transportation levy for
the district according to Minnesota Statutes 1996, section
124.226, subdivision 5, excluding the levy attributable to
nonpublic school pupils; plus

(iv) the fiscal year 1996 late activity bus levy for the
district according to Minnesota Statutes 1996, section 124.226,
subdivision 9, excluding the levy attributable to nonpublic
school pupils; plus

(v) an amount equal to one-third of the fiscal year 1996
bus depreciation for the district according to Minnesota
Statutes 1996, section 124.225, subdivision 1, paragraph (b),
clauses (2), (3), and (4).

(2) divide the result in clause (1) by the district's
1995-1996 fund balance pupil units.

Subd. 18. Transportation sparsity revenue allowance.
(a) A district's transportation sparsity allowance equals the
greater of zero or the result of the following computation:

(i) Multiply the formula allowance according to subdivision
2, by .1469.

(ii) Multiply the result in clause (i) by the district's
sparsity index raised to the 26/100 power.

(iii) Multiply the result in clause (ii) by the district's
density index raised to the 13/100 power.

(iv) Multiply the formula allowance according to
subdivision 2, by .0485.

(v) Subtract the result in clause (iv) from the result in
clause (iii).

Subd. 19. Transition allowance. (a) A district's
transportation transition allowance for fiscal year 1998 and
later equals the result of the following:

(1) if the result in subdivision 18, paragraph (a), clause
(iii), for fiscal year 1998 is less than the fiscal year 1996
base allowance, the transportation transition allowance equals
the fiscal year 1996 base allowance minus the result in
subdivision 18, paragraph (a), clause (iii); or

(2) if the result in subdivision 18, paragraph (a), clause
(iii), for fiscal year 1998 and later is greater than or equal
to the fiscal year 1996 base allowance, the transportation
transition allowance equals zero.

(b) A district's compensatory transition allowance equals
the greater of zero or the difference between:

(1) the amount of compensatory revenue the district would
have received under Minnesota Statutes 1996, section 124A.22,
subdivision 3, for fiscal year 1998 computed using a basic
formula allowance of $3,281; and

(2) the amount the district receives under subdivision 3;
divided by

(3) the district's actual pupil units for fiscal year 1998.

(c) A district's cooperation transition allowance for
fiscal year 2001 and later equals the greater of zero or the
difference between:

(1) $25,000; and

(2) $67 times the district's resident pupil units for
fiscal year 2001; divided by

(3) the district's resident pupil units for fiscal year
2001.

(d) A district's transition allowance for fiscal years 1999
and 2000 is equal to the sum of its transportation transition
allowance and its compensatory transition allowance. A
district's transition allowance for fiscal year 2001 and
thereafter is equal to the sum of its transportation transition
allowance, its compensatory transition allowance, and its
cooperation transition allowance.

Subd. 21. Transition levy adjustment. A district's
general education levy shall be adjusted by an amount equal to
the district's transition revenue times the lesser of 1 or the
ratio of its adjusted net tax capacity per adjusted marginal
cost pupil unit to $8,404.

Subd. 22. Transition aid adjustment. A district's
transition aid adjustment is the difference between the
transition revenue and the transition levy.

Subd. 23. Referendum offset adjustment. A district
that qualifies for the referendum allowance reduction under
section 126C.17, subdivision 12, and whose referendum allowance
under section 126C.17, subdivision 1, as adjusted under section
126C.17, subdivisions 2 and 12, does not exceed the referendum
allowance limit under section 126C.17, subdivision 2, clause
(2), shall receive a referendum offset adjustment. In fiscal
year 2000 and thereafter, the referendum offset adjustment is
equal to $25 per resident pupil unit.

Subd. 24. Equity revenue. (a) A school district
qualifies for equity revenue if the school district's adjusted
marginal cost pupil unit amount of basic revenue, supplemental
revenue, transition revenue, and referendum revenue is less than
the 90th percentile of school districts in its equity region for
those revenue categories and the school district's
administrative offices are not located in a city of the first
class on July 1, 1999.

(b) Equity revenue for a qualifying district that receives
referendum revenue under section 126C.17, subdivision 4, equals
the product of (1) the district's adjusted marginal cost pupil
units for that year; times (2) the sum of (i) $10, plus (ii)
$30, times the school district's equity index computed under
section 126C.10, subdivision 6.

(c) Equity revenue for a qualifying district that does not
receive referendum revenue under section 126C.17, subdivision 4,
equals the product of the district's adjusted marginal cost
pupil units for that year times $10.

Subd. 25. Regional equity gap. The regional equity
gap equals the difference between the fifth and the 90th
percentile of adjusted general revenue per marginal cost pupil
unit.

Subd. 26. District equity gap. A district's equity
gap equals the greater of zero or the difference between the
district's adjusted general revenue and the regional 90th
percentile of adjusted general revenue per marginal cost pupil
unit.

Subd. 27. District equity index. A district's equity
index equals the ratio of the sum of the district equity gap
amount to the regional equity gap amount.

Subd. 28. Equity region. For the purposes of
computing equity revenue under subdivision 23, a district whose
administrative offices on July 1, 1999, is located in Anoka,
Carver, Dakota, Hennepin, Ramsey, Scott, or Washington county is
part of the metro equity region. Districts whose administrative
offices on July 1, 1999, are not located in Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott, or Washington county are part
of the rural equity region.